California Supreme Court Hears Oral Argument in Friends of the College of San Mateo Gardens v. San Mateo County (Case No. S214061)

On May 4, 2016, the California Supreme Court heard oral argument in Friends of the College of San Mateo Gardens v. San Mateo County Community College District (Case No. S214061), which addresses the standard of review that applies when a lead agency decides that changes or additions to a previously approved project can be treated as a modified version of the original project instead of as an entirely new project. Under the California Environmental Quality Act (CEQA), a modified version of a project will often be analyzed with an expedited “addendum” to the previous CEQA document while an entirely new project may require starting the CEQA review from the beginning. The Supreme Court’s opinion will likely provide important guidance on this frequently encountered situation. The Court is expected to issue its opinion by early August.

Factual and Procedural Background

Friends of the College of San Mateo Gardens (Friends) challenged the San Mateo County Community College District’s (the District) decision to demolish a building complex on the District’s College of San Mateo campus. The District previously approved a project plan to renovate ten campus buildings and demolish sixteen others, using a mitigated negative declaration to address the project’s environmental impacts. The District later revised its plans to include demolition of one building that had been set for renovation and renovation of two buildings previously slated for demolition. The District evaluated the possible environmental consequences of the change in plans, concluded that the revisions were not extensive enough to require preparation of a subsequent Environmental Impact Report (EIR), and adopted an addendum to the previously approved mitigated negative declaration.

Friends petitioned the Superior Court for a writ of mandate, arguing the demolition project violated CEQA and seeking to compel the District to prepare an EIR for the demolition project as a “new project” rather than a change to the previously adopted campus renovation plans. The trial court granted Friends’ petition. The Court of Appeal affirmed, opining that the demolition project was a “new project” requiring environmental review beyond an addendum. The Supreme Court granted review, framing the issue as follows: “When a lead agency performs a subsequent environmental review and prepares a subsequent [EIR], a subsequent negative declaration, or an addendum, is the agency’s decision reviewed under a substantial evidence standard of review (Mani Brothers Real Estate Group v. City of Los Angeles (2007) 153 Cal.App.4th 1385), or is the agency’s decision subject to a threshold determination whether the modification of the project constitutes a “new project altogether,” as a matter of law (Save our Neighborhood v. Lishman (2006) 140 Cal.App.4th 1288)?”

Oral Argument Questions for the District

At the start of oral argument by counsel for the District, the Supreme Court Justices honed in on whether Public Resources Code section 21166 (section 21166), which establishes a presumption against subsequent review, applies equally to EIRs and negative declarations. Justice Liu, in particular, appeared skeptical that negative declarations would be entitled to the same presumption of finality under section 21166 as EIRs. (It is noteworthy, however, that the Court of Appeal did not reach this issue when it decided the case. The Court of Appeal assumed that CEQA Guidelines section 15162, which provides that the provisions regarding subsequent CEQA documents contained in section 21166 applies both to negative declarations and EIRs, was valid despite its departure from the exact statutory language of section 21166. Using CEQA Guidelines section 15162, the Court of Appeal found that the District’s addendum made far more than “minor technical changes or additions” to the project plan such that the demolition project was a “new project” requiring subsequent environmental review.)

Other Justices joined Justice Liu in focusing on whether there is or should be a distinction between EIRs and negative declarations when dealing with subsequent environmental review. Justices Liu and Cuéllar asked counsel for the District about what they perceived to be a “fairly significant difference” between an EIR analysis and the adoption of a negative declaration. Justice Kruger also questioned counsel for the District about whether the applicability of section 21166’s presumption of finality depends on how fulsome or complete the initial review of a project was. Counsel for the District argued that a negative declaration is not a “second class citizen” and that section 21166’s presumption of finality applies equally to an EIR and a negative declaration. In support of this argument, counsel for the District cited the short statute of limitations applicable to these determinations, which reflects a policy in favor of finality.

Justices Kruger and Werdegar then turned the questioning to the issue of whether the Court should conduct a first-step analysis to determine whether the modification at issue is really a “new project,” and whether there was such a thing as a “new project” at all. Counsel for the District responded that CEQA does not sanction any such “threshold” test and contrasted this circumstance with the initial determination as to whether something is a “project” under CEQA. Only the agency has the ability to make a determination as to whether something is a “new project” under CEQA. As to the practical implications of this interpretation of CEQA, counsel for the District explained that on one hand, where changes are within the scope of a prior analysis, they may be addressed by updating the impacts analysis as necessary. On the other hand, there could be a “new project” where changes are outside of the scope of a prior analysis and there was no prior review.

Justice Cuéllar then brought the focus back to section 21166, questioning whether the Court has any role if section 21166 reflects a concern with moving this whole process along and a project is merely a modification. Justice Liu added that the substantial evidence standard seems to be the correct test where an EIR has already been done because, under 21166, there is a presumption of finality. He queried whether the same standard applies to negative declarations. Counsel for the District responded that what matters is that the “process” has been completed and the statute of limitations has run. A negative declaration is treated the same as an EIR, and the substantial evidence standard of review applies. Justice Liu replied that where changes are being proposed after the “process” is complete the standard is lenient, and suggested that this creates a loophole whereby a lot of changes could be proposed after the “process” is complete, thereby avoiding the more stringent standard which applies during the initial “process” of review. On Justice’s Liu’s point, Justice Cuéllar suggested that an agency would want to take advantage of that “loophole” knowing that the fair argument standard would drop out after a negative declaration is adopted. In response to counsel’s argument that this presumes bad faith on the agency’s part, Justice Lui replied that it is not a question of an agency acting in bad faith; it is a question of what standard applies.

Oral Argument Questions for Friends

During oral argument by counsel for Friends, the Justices briefly touched on the issue of whether the Court should make a threshold determination as to whether something is a “new project.” Justice Cuéllar asked whether the court got it right in Save Our Neighborhood v. Lishman.Counsel for Friends responded affirmatively, stating that the first question is whether a project is “new.” Counsel for Friends explained that the Court should consider the totality of the circumstances and argued that where a structure is to be preserved, but is later slated for demolition, the project should be treated as “new.”

Justice Liu then quickly turned the discussion back to the issue of whether negative declarations and EIRs are of “equal dignity.” Justices Cuéllar and Kruger queried whether the real issue is the adequacy with which subsequently proposed changes were addressed during the initial process; i.e., whether the negative declaration or EIR sufficiently addresses the proposed change. Counsel for Friends responded that negative declarations are treated differently and are only valid if there is no fair argument of significant environmental impact. Thus, the difference is the standard of review – there is no presumption that negative declarations are final under section 21166.

Justice Liu then asked counsel for Friends to explain the policy behind section 21166. He questioned whether an agency’s determination that there are no substantial changes to a previous project is tantamount to a negative declaration. Counsel for Friends responded that because an EIR is much more substantive (e.g., a negative declaration does not include an analysis of alternatives), the policy in favor of finality should prevail, but that this principle should not apply to a negative declaration. Because section 21166’s presumption of finality does not explicitly apply to negative declarations, the fair argument standard, as opposed to the substantial evidence standard, applies to all negative declarations.

The Justices then asked counsel for Friends whether section 21166’s omission of any reference to negative declarations is significant and whether Guideline section 15162 is a valid gap-filling measure. Counsel explained section 21166’s omission is significant – an addendum to a negative declaration is only really appropriate for minor technical changes. Counsel argued that the court got it wrong in Benton v. Board of Supervisors (1991) 226 Cal.App.3d 1467, and this is what caused the problem in the Guidelines. Counsel suggested that Guidelines section 15162 should be amended to remove all references to negative declarations because section 21166 only applies to EIRs.

Justice Liu returned again to an earlier issue – from a practical perspective, and apart from consideration of alternatives, whether the analysis under a negative declaration is as rigorous as the analysis for an EIR. Counsel for Friends responded that the processes are very different – a negative declaration does not require the depth of analysis that an EIR requires and is not subject to the same public comment requirements that apply to an EIR. Thus, it’s a matter of whether the change or the impact was evaluated in the initial analysis. Here, we have a “new project” because it’s a 180-degree turn from what was initially proposed for this site. Justice Kruger then hypothesized, assuming an EIR was prepared, all would agree that the substantial evidence standard applies, and the question becomes whether the change was within the scope of the earlier EIR.

At the conclusion of the questioning, Justices Liu and Kruger asked counsel for Friends how much of this (i.e., coverage of section 21166) was actually litigated in the lower courts. Counsel could not remember precisely, but thought the argument was raised.

Oral Argument Questions for the District in Rebuttal

Justice Cuéllar asked Counsel for the District for her response to the argument that section 21166 only applies to EIRs. Counsel for the District responded that Guideline section 15162 has been found to be a gap filler, such that negative declarations are also entitled to a presumption of finality. Counsel for the District was not aware of any court that has held that Guideline section 15162 is invalid.

Justice Liu concluded oral argument by asking whether the Court could avoid reaching a decision as to the validity of Guideline section 15162. Counsel for the District responded that the Court could avoid this issue because the lower court focused on whether the proposed modification was merely a change or a “new project.”

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